FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
SEC Files Charges in Investment Scheme Involving Company Promoting Purported Alzheimer's Treatment
The Securities and Exchange Commission announced that it filed a civil lawsuit against Nevada corporation Your Best Memories International Inc. and its president, Robert Hurd, of Los Angeles, California, for misleading investors in Your Best Memories about how their funds would be used and for making misleading statements that one of the products touted to investors had received approval from the U.S. Food and Drug Administration as a treatment for Alzheimer's Disease. Also charged was Kenneth Gross, of Porter Ranch, California, for selling Your Best Memories stock without being registered as a broker-dealer as required by the federal securities laws.
According to the SEC's complaint, Your Best Memories purportedly was in the business of raising money from investors on behalf of Moving Pictures, Inc., a Massachusetts-based company in the business of developing products intended to improve memory function in individuals suffering from Alzheimer's disease, dementia or memory loss. The complaint alleges that, in total, Your Best Memories raised approximately $1.2 million from more than 50 investors in an offering of securities that was not registered with the SEC as required under the federal securities laws.
Specifically, the complaint alleges that investors were told by Hurd and Your Best Memories that their funds would, in large part, fund the development and marketing of Moving Pictures' memory enhancing products. According to the complaint however - unbeknownst to investors and contrary to Hurd and Your Best Memories' representations - a mere 17% of the funds raised by Your Best Memories was forwarded to Moving Pictures for their intended purposes. The SEC alleges that Hurd funneled at least 37% of investor funds to himself, by transferring money to another of his companies, Smokey Canyon Financial, Inc., or simply by making cash withdrawals of investor funds. The SEC named Smokey Canyon as a relief defendant, alleging that it was unjustly enriched by its receipt of investor funds. The SEC also alleges that Hurd and Your Best Memories further defrauded investors by making Ponzi payments (using investors' principal to make payments purporting to be investment returns to other investors) and that Hurd and Your Best Memories misled investors by falsely stating that they had secured FDA approval to sell coconut oil as a treatment for Alzheimer's disease, when in fact the FDA never approved such a claim.
The SEC's complaint charges Hurd and Your Best Memories with violations of Sections 5(a) and (c) and 17(a) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and charges Hurd with aiding and abetting violations by Your Best Memories of Section 17(a)(2) of the Securities Act as well as with control person liability under Section 20(a) of the Exchange Act. The complaint also charges Gross with violations of Sections 5(a) and (c) of the Securities Act and Section 15(a) of the Exchange Act. The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest and civil penalties against Your Best Memories, Hurd and Gross. The SEC is also seeking disgorgement and prejudgment interest against relief defendant Smokey Canyon.
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